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Health Care and the Post Office

April 23, 2010, 2:52 pm

The recent bankruptcy of the USPS and the proposal to cut Saturday delivery has interesting implications for government and health care.  Everyone, from the GAO to the management of the USPS know that there are substantial productivity improvement that could be had with better labor deployment and employee accountability, but no one has the will to take on the union.  As a result, the only cost cutting idea they can propose is service cuts.  Which is further proof of what I have been saying for a couple of years -- that despite all the hopey changey talk, the only real idea anyone in the Obama administration or Congress can come up with for health care cost reduction is reduced services and/or price controls (which reduce supply and thus services).

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Category: Health Care
  • mesaeconoguy

    "...reduced services and/or price controls (which reduce supply and thus services)."

    Which lead to rationing, and things like death panels (dead letter office?).

  • http://nothirdsolution.com David Z

    If you're old enough, you probably remember when the USPS delivered mail twice daily.

  • zero wolf

    if you're **really** old enough, and lived in NYC in the 1880's, i've read that you got your mail delivered *5* times a day. presumably it was like that in the other large cities, too. times change and government services deteriorate.

  • Fred Z

    "you got your mail delivered *5* times a day"

    At what cost?

    Does anyone believe we are somehow smarter or dumber than the people of the 1880s? That governments have grown less efficient?

    No, they have always been inefficient idiots, but it's only now that they are huge inefficient idiots that we notice.

  • Bob Smith

    The USPS spent billions on capital improvements that, unlike what one would see in the private sector, produced zero cost reduction. From what I can tell, any savings was simply given to the employee's union in wages and benefits. This is not surprising, since the USPS has lawmaking authority and uses it to stifle competition. Actually, I'm quite impressed how it could have such power and still lose money.

  • brazil84

    I think I mentioned this before . . . in fairness, one should keep in mind that the USPS is getting hammered by competition from fax and e-mail.

    That said, I do think government run health care would be a lot like the postal service. I hate going to the post office because the wait is so long and the clerks tend to have a bad attitude.

    Actually I think health care would be worse. Imagine if instead of having to buy a stamp for each letter, you paid a yearly mail tax based on your income and then you were free to show up at the post office and use as many services as you needed or thought you needed.

    Imagine if some services offered by the post office were politically charged just like treatment for breast cancer or AIDS.

  • tribal elder

    With the profit motive to be eliminated in medicine, today's docs will not encourage their children to join the practice. The individual incentive for investing in human capital (the years of study and deferring earnings with school and residency) will be gone. The solution will be compulsory service or civil servant docs. We'll learn to expect less (and less intensive and less responsive) medical care. Try calling any federal agency at 4PM on a Friday, going into a 3 day federal holiday weekend. That's the level of service in medicine 10-15 years from now.

    Our nation's best and brightest will then become lawyers and lobbyists, who won't increase the size of the economic pie, but merely redirect its slices.

    But there is a bright spot-- with our to-be-nationalized health industry getting sovereign immunity for itself, at least we won't see the malpractice lawyer TV ads anymore.

  • Noah

    brazil84: mentioning it until hell freezes over doesn't change the facts. The volume of private party to private party first class mail was in serious decline long before email was generally available to the public.

  • http://evilredscandi.blogspot.com Evil Red Scandi

    @brazil84 - the decline in volume is just about irrelevant. As many have pointed out above, a private company would have made adjustments in staffing levels. The USPS cannot because of politics. In fact, the only thing keeping them even close to afloat is the massive amount of junk mail (dead tree spam) they deliver, and the fact that we need a nice fat paper trail of our financial transactions to prove our compliance with the tax code (statements, bills, etc) in the event of an audit. About the only "useful" things I ever get in the mail are really cheap purchases from Amazon or eBay - everything else is UPS or FedEx. Aside from my IRS compliance paper trail, if the post office simply disappeared I'd be fine.

    Just be glad the government doesn't make buggy whips - we'd still be employing thousands of people doing that today.

  • brazil84

    "The volume of private party to private party first class mail was in serious decline long before email was generally available to the public."

    And this contradicts my point how?

    "the decline in volume is just about irrelevant. As many have pointed out above, a private company would have made adjustments in staffing levels"

    Just like Tower Records did?

  • http://evilredscandi.blogspot.com Evil Red Scandi

    "Just like Tower Records did?"

    Exactly. Tower Records became obsolete, and it vanished. It was nice in its day. That day is over. Now we buy music through Amazon and iTunes. Frankly, as far as I'm concerned it's a step up - inventory is always in stock, and I can see the opinions of dozens or hundreds of people rather than one guy who may or may not have listened to what I'm looking at and may or may not share my tastes.

    What would you do, take money from people against their will to keep Tower Records open even though there are no longer enough people who find the experience compelling enough to make it even come close to breaking even? Seriously?

  • brazil84

    "Tower Records became obsolete, and it vanished"

    That's a bit more than an "adjustment in staffing levels."

    "What would you do, take money from people against their will to keep Tower Records open even though there are no longer enough people who find the experience compelling enough to make it even come close to breaking even?"

    No I wouldn't. I'm not sure how this applies to the postal service though.

  • Noah

    brazil84:And this contradicts my point how?

    You imply cause(email) and effect(decline in mail volumes) and there wasn't any. Mail volumes went south long before email became generally available.

  • Ron H.

    David Z said:

    "If you’re old enough, you probably remember when the USPS delivered mail twice daily.
    April 23, 2010, 6:42 pm"

    And if you are a whole lot older than that, you may remember when Lysander Spooner ran a private mail company that competed successfully against the USPS. He was eventually driven out of business by the endless drain of legal expenses he incurred fighting the Federal government and its bottomless pockets. His competition did, however, cause the USPS to drop its first class postage rate to 3 cents in 1851, where it remained until 1958.

    http://www.lysanderspooner.org/STAMP3.htm

  • http://evilredscandi.blogspot.com Evil Red Scandi

    @brazil84 - Tower Records was your analogy, not mine. But it's not like it just up and vanished suddenly. It was in decline for many years first, started losing money, and then went out of business. The Postal Service should do the same thing - shrink until it disappears. In fact, it's not like the world would end if the Postal Service just went away right now.

  • brazil84

    "You imply cause(email) and effect(decline in mail volumes) and there wasn’t any. Mail volumes went south long before email became generally available."

    Can you show me the figures please? Personally I know that my use of fax and e-mail (and electronic bill pay, etc.) has supplanted my use of mail a lot of the time.

    I recall that faxing became pretty popular in the 80s and e-mail in the 90s.

    So let's see your cite showing that the drop in demand for first class mail took place BEFORE the 1980s.

  • brazil84

    "Tower Records was your analogy, not mine. "

    It's not an analogy so much as a counter-example. And it's your generalization about private businesses, not mine.

    "The Postal Service should do the same thing – shrink until it disappears"

    Well maybe it should and maybe it shouldn't, but it's not the case that the Postal Service is having problems simply because of waste and mismanagement.

  • txjim

    I'm fed up with subsidizing failure. USPS is like Detroit and because of the way it is managed it has evolved just as most of us would have imagined. It has been failing for decades and instead of changing direction it just uses government to force the rest of us to pay to keep them afloat.

    As an aside, one of the unmentioned political forces behind propping up USPS are the trucking companies that haul mail. A sweet gig if you can get it. Very similar to the "lucky" owners of alcohol distributorships like John McCain's inlaws.

  • richard

    This is basically correct. Look at the UK with their NHS or Canada.

    There are no savings. The concept of savings (because you have to do better than your competitor) does not exist in a GSE.

  • http://www.ilovebenefits.icbn1.com ilovebenefits

    Interesting analogy. What is particularly interesting about the reduction of mail services is whether with all of the alternatives available, is the post service something that is still needed as it once was? Reducing services might actually be an appropriate response to email, UPS, texting, video conferencing, and many additional technologies.

    Similarly in health care, more services are not necessarily appropriate, safe or efficient uses for scarce resources. Health care as demonstrated by the Dartmouth Atlas (Wennberg and Fisher) is supply, not demand, driven. Therefore we need to rethink the entire delivery system including ACOs, payment methodologies and comparative effectiveness. Follow these developments at http://www.ilovebenefits.icbn1.com

  • Dr. T

    My high school-educated brother-in-law is a USPS supervisor. When he was a mail carrier, his designated route took less than five hours at a comfortable walking pace. Every day he took a 2.5 hour lunch and watched a movie at the mall.

    When he moved from carrier to assistant supervisor and then to supervisor, he received little training in management, and most of that focused on personnel issues such as labor laws, union rules, equal opportunity hiring, and handling sexual harassment claims. He received no training at assessing and improving productivity and efficiency. Because the USPS kowtows to the union, its low productivity mail carriers and sorters get paid better than federal hospital medical technologists and radiation technologists who have bachelor of science degrees and who are far more productive.

    Since government managers have little incentive to improve worker productivity, the post office will always be more costly than similar private businesses such as FedEx.

    Another grumble: The cancellation of Saturday deliveries will reduce significantly the value of my NetFlix subscription, because I will get fewer movies per month.

  • sethstorm


    My high school-educated brother-in-law is a USPS supervisor. When he was a mail carrier, his designated route took less than five hours at a comfortable walking pace. Every day he took a 2.5 hour lunch and watched a movie at the mall.

    You sound a bit resentful that they're able to do the impossible - prosper w/o a degree.


    When he moved from carrier to assistant supervisor and then to supervisor, he received little training in management, and most of that focused on personnel issues such as labor laws, union rules, equal opportunity hiring, and handling sexual harassment claims. He received no training at assessing and improving productivity and efficiency. Because the USPS kowtows to the union, its low productivity mail carriers and sorters get paid better than federal hospital medical technologists and radiation technologists who have bachelor of science degrees and who are far more productive.

    Hardly so. You just seem to think that drudgery should be the only choice for those whom do not go the college degree route.
    You want him to suffer for his success.

  • jeffersonian1

    The Pew Research Center for the People and the Press recently published an expansive piece of survey research, The People and Their Government: Distrust, Disconten, Anger and Partisan Rancor.

    One of the fascinating nuggets contained therein is that the Postal Service is currently viewed favorably by more Americans than any other department or agency of the federal government.

    Indeed, 83% of Americans view the Postal Service favorably. Contrast that with 67% who view the Defense Department favorably, 47% who view the IRS favorably and 26% who view the Congress favorably.

    The Postal Service's high favorability is all the more interesting when one considers that more Americans have more contact with (and thus the more grounds to come to a fact-based opinion) the USPS than with any other department or agency.

    While Pew did not survery customer satisfaction with health insurance companies, I'd be willing to bet dollars to doughnuts that those companies would have nowehere near the Postal Service's high favorable ratings.

    We have yet to see how well the recenly passed health care reform legislation will work to improve the lives of ordinary Americans. If people come to view it as positively as the Postal Service, those who cried "Wolf" may spend a long time in the political wilderness.

  • Dr. T

    sethstorm replied: "You sound a bit resentful that they’re able to do the impossible – prosper w/o a degree."

    You have major biases and make incorrect inferences.

    I'm angry that a Constitutionally-mandated monopoly mail delivery service pays more than twice the going rate for unskilled labor, and that we have to foot the bill. I'm angry that the government pays a mail sorter more than a skilled professional with a hard-won science degree.

    Postal workers "prosper without a degree" due to a flawed system, not because they have outstanding skills, knowledge, or productivity.

    sethstorm also added: "You just seem to think that drudgery should be the only choice for those whom do not go the college degree route.
    You want him to suffer for his success."

    Mail sorting and carrying are drudgery whether the workers get $10 an hour or $30 an hour. Unskilled drudgery does not deserve high pay. Look at how many people apply for entry-level jobs (paying ~$9.00/hr) whenever a new WalMart opens.

    My brother-in-law complained to me about the poor quality of his training when he became a supervisor. (How else whould I have known about it?) He is happy to be making more than $80,000 a year, but he admits that he has never truly earned what he was paid throughout his career at USPS. He would like to see the USPS become more efficient, and he would like to be able to fire his least productive, least reliable, and most troublesome employees. However, between federal protections for employees and the strength of the union, it is nearly impossible to fire anyone who didn't commit a major felony, on-the-job, in front of at least three witnesses.

  • T S

    While I agree with many here regarding the USPS, I can say that as a spouse of a letter carrier, that productivity of the employees is NOT the problem, at least in my area. My spouse is harassed, pushed, shamed, hounded, threatened to go faster. The management at the USPS is the poster child of how not to run things. That's why the clerk you deal with always has a sour attitude.

    In the era of declining mail volumes, it still takes the same time to walk house to house and deliver 1 letter as it does 10 letters.

  • spiro

    Jeffersonian1 said: "We have yet to see how well the recenly (sic) passed health care reform legislation will work to improve the lives of ordinary Americans. If people come to view it as positively as the Postal Service, those who cried “Wolf” may spend a long time in the political wilderness."

    And that is all fine and good were the government taking over an industry that dealt with selling office supply products or entertainment. By taking over the health care industry, on the other hand, government workers (with no medical training) will make decisions that directly affect our mortality - for better or worse, who knows? That is NOT an intellectual experiment that I want to participate in.
    BTW, even with the demonizing of Toyota in this past year has the popularity of GM increased under government management? Judging by all the big lot GM dealerships that have shut down in my state -- where every citizen has an American-made pick-up in their driveway -- I think not. Especially since the Ford dealers continue to thrive.